One-glance verdict
Undervalued
$14.41 our estimate vs market $2.37
Wall Street consensus: $1.70 (-88.2% lower than our fair-value estimate)
84% below our estimate, below the bear case
Fundamentals snapshot
Montauk Renewables, Inc.
MNTK · NCM · Basic Materials · Specialty Chemicals
Current price
$2.37
52-week range
$1.07 - $3.28
Market cap
$337.35M
Balance sheet
Distressed
0.85x Concerning
Net debt $141.38M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 7.2% last year.
- Reward Returns 3.1% on equity, ahead of 50% of its peers.
- Reward Free cash flow was positive in 3/10 years.
- Risk Operating margin compressed from 24.0% to 1.1% over 3 years.
What this company does
Montauk Renewables, Inc.
Montauk Renewables, Inc. turns gas that would otherwise escape from landfills and farms into cleaner energy, like natural gas or electricity. Their main income comes from selling this cleaner energy and special credits called Renewable Identification Numbers (RINs) to big companies, which helps those companies meet environmental rules. This is important because it shows Montauk is making money by providing a greener alternative to traditional energy sources.
How the company got here
Montauk Renewables started in 1980, initially focusing on converting landfill gas into electricity. Over the decades, the company evolved, acquiring expertise in managing and processing biogas from landfills and other non-fossil fuel sources. A significant turning point was the strategic shift towards producing Renewable Natural Gas (RNG), which often offers better economic potential than just generating electricity, especially when combined with environmental credits. This transition, coupled with building a strong portfolio of biogas assets, led to its initial public offering (IPO) on the Nasdaq stock exchange in 2021, marking its entry as a publicly traded company focused on expanding its RNG production and optimizing its operations.
What it actually does
Montauk Renewables is in the business of turning waste into valuable energy. They capture methane, a potent greenhouse gas that comes from decomposing organic matter in places like landfills, and process it. This captured gas is then converted into either Renewable Natural Gas (RNG), which can be used like regular natural gas for heating or in vehicles, or into renewable electricity that can be sent to the power grid. Essentially, they take a harmful byproduct of waste and transform it into a cleaner energy source.
Renewable Natural Gas
This is Montauk's primary business, making up about 90% of its revenue. They take raw biogas collected from landfills and other sources and upgrade it into pipeline-quality Renewable Natural Gas (RNG). This RNG is then sold to customers like local utilities and large refiners. A significant part of the revenue from RNG also comes from selling associated environmental attributes, such as Renewable Identification Numbers (RINs) and low-carbon fuel credits, which are valuable to companies needing to meet environmental regulations.
Renewable Electricity Generation
This segment represents about 10% of Montauk's revenue. In this part of the business, the company uses the captured biogas to generate electricity, which is then supplied to the electrical grid. While historically a significant part of their operations, the company has increasingly focused on RNG due to its often more favorable economics, especially when environmental credits are considered. Montauk is also exploring ways to qualify its renewable electricity generation for specific environmental credits, like eRINs.
What management is betting on now
Montauk's current strategy is centered on growing its Renewable Natural Gas (RNG) production. They are focused on expanding their existing facilities and developing new projects, including those that use agricultural waste as a source for biogas. Management is also prioritizing securing long-term agreements for biogas feedstock, which is crucial for consistent operations. Additionally, they aim to optimize their current assets and explore new opportunities, such as converting some of their older renewable electricity projects to RNG production, to maximize returns and capitalize on the growing demand for cleaner fuels.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$16.02M
FY2024 Q4
$-8.27M
FY2025 Q1
$-2.49M
FY2025 Q2
$-25.46M
FY2025 Q3
$-17.16M
FY2025 Q4
$-41.10M
FY2026 Q1
$-15.02M
FY2026 Q2
$-10.09M
Revenue
$54.02M
Net income
$226.00K
Diluted EPS
0.00
Operating cash flow
$14.60M
Free cash flow
$-10.09M
Fetching…
Sources
Revenue
$46.43M
Net income
$5.00K
Diluted EPS
0.00
Operating cash flow
$15.85M
Free cash flow
$-15.02M
Fetching…
Sources
Revenue
$43.39M
Net income
$2.49M
Diluted EPS
0.01
Operating cash flow
$337.00K
Free cash flow
$-41.10M
Fetching…
Sources
Revenue
$45.26M
Net income
$5.21M
Diluted EPS
0.04
Operating cash flow
$12.65M
Free cash flow
$-17.16M
Fetching…
Sources
Revenue
$45.13M
Net income
$-5.49M
Diluted EPS
-0.04
Operating cash flow
$8.21M
Free cash flow
$-25.46M
Fetching…
Sources
Revenue
$42.60M
Net income
$-464.00K
Diluted EPS
0.00
Operating cash flow
$9.14M
Free cash flow
$-2.49M
Fetching…
Sources
Revenue
$27.69M
Net income
$-8.45M
Diluted EPS
-0.05
Operating cash flow
$724.00K
Free cash flow
$-8.27M
Fetching…
Sources
Revenue
$65.92M
Net income
$17.05M
Diluted EPS
0.12
Operating cash flow
$28.59M
Free cash flow
$16.02M
Fetching…
Sources
Is it cheap or expensive?
Fair value $14.41 vs current price $2.37
Wall Street consensus is the average analyst price target: $1.70 (-88.2% lower than our fair-value estimate).
Our most-likely fair value is $14.41 a share — about 508.2% above today's price of $2.37, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Distressed
Net debt $141.4M. Interest coverage 0.8x.
Net debt
$141.38M
Interest coverage
0.85x
Montauk Renewables, Inc.'s profit covers its interest bill about 0.8 times over. which is stronger than most peers shown here and 4 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Distressed
Worse cushion
Baseline
Better cushion
MNTK
BASELINE
Montauk Renewables, Inc.
Total debt $157.14M Interest coverage 0.85x This is the baseline the peer rows are being compared against.
Total debt $431.69M Interest coverage 0.17x -79% vs MNTK Carries about 4.9x less debt cushion than MNTK.
Total debt $322.57M Interest coverage -1.81x -100% vs MNTK This peer has almost no interest-payment cushion compared with MNTK.
Total debt $170.70M Interest coverage -1.07x -100% vs MNTK This peer has almost no interest-payment cushion compared with MNTK.
Total debt $82.94M Interest coverage 1.41x +67% vs MNTK Carries about 1.7x more debt cushion than MNTK.
Total debt $324.00K Interest coverage -346.34x -100% vs MNTK This peer has almost no interest-payment cushion compared with MNTK.
What you should know
The case for and against MNTK
3 Rewards
1 Risk
Rewards
-
Revenue grew 7.2% last year.
-
Returns 3.1% on equity, ahead of 50% of its peers.
-
Free cash flow was positive in 3/10 years.
Risks
-
Operating margin compressed from 24.0% to 1.1% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
39.50x
Forward P/E
7.73x
P/B
1.28x
P/S
1.78x
EV/EBITDA
12.59x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
34.7%
Operating margin
1.1%
Net margin
4.2%
ROE
3.1%
ROA
0.7%
Health
Liquidity and balance-sheet strength
Debt / equity
0.59x
Current ratio
0.62x
Quick ratio
0.51x
Total debt
$157.14M
Total cash
$15.76M
Growth
How the business has been compounding
Revenue TTM
$189.10M
Revenue 5Y CAGR
4.5%
EPS TTM
0.06
EPS 5Y CAGR
-65.8%
Cash flow
How much cash the business throws off
Operating CF TTM
$43.43M
Free CF TTM
$-86.21M
FCF margin
-45.6%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
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